Common Mistakes / FAQ

Your income is what you have received during the taxable year. This income is adjusted to a lower amount, taxable income, by your filing status and number of dependents. It is further lowered by elections which you qualify for, such as itemized deductions.

What benefit do I receive if I pay support ? What benefit do I receive if I receive support ?

Generaly if you PAY support you receive no tax benefits, other than your child growing up and saying "thanks". If you receive support you generally do not have to claim in on your tax return. Support received is considered income on the Wisconsin Homestead form, as is Social Security, Grants, etc. The Wisconsin Homestead Credit is not a tax form.

Phantom income is income which you do not receive a check or cash for every year, but must pay taxes on the amount as if you did receive payment.

Sit down for this. If you rent a portion of your home or vacation home for less than 15 days, good ole Uncle Sam DOES NOT require you to report the income on your tax return. "Ain't" many places in the tax code that allow someone to get income tax-free.

Social Security received is non-taxable. Do I have to claim it on my return(s) ?

You should always include Social Security on you tax return. There are lines to enter the amount received and amount taxed. If you receive Social Security and a pension, you generally DO NOT use the worksheets in the Federal and Wisconsin booklets. If you read the paragraph just before the Federal worksheet you will be informed how to complete a worksheet. If all you Social Security is not taxed it still is needed to determine if you qualify for Wisconsin Homestead.

My friend is doing my taxes and wants me to sign a blank tax form. Should I ?

Go to our home page and print out and wear the "I'm Stupid" button if you ever sign a blank tax form or any kind, shape, or form. If someone who prepares your return asks you to sign a blank form, it is illegal. Give them the button to wear.

The age of all parties on your return are used to determine crossreferences to social security, tax applications for pensions and social security, earned income tax credits for both you and/or your children, qualifications for the Homestead Credit, Child Credit, and Educational Credit, and numerous other less used applications.

Use form 8822 to report address change. If you e-file your refund is not mailed to your address (unless requested),however, if there is a problem with e-filing to your account, your refund will be mailed to the address on your return. Be sure it is correct.

I am positive my return was prepared correctly, but the IRS adjusted it lower. What can I do ?

First make certain your positive is correct. Have your return checked by someone else (Fox Tax offers a free service after the tax season). The IRS will send a letter explaining the changes. If there is an error on the part of the IRS (remember the IRS have human beings who can make errors) you have the right to appeal. Simply appeal the IRS decision with your supporting documents.

I owe the IRS money and have over the years paid them much more than the initial amount due. What can I do ?

You make an offer to settle. The IRS does settle past due amounts. You make the offer and supply the reason. The IRS can accept, counter, or refuse your offer. Common sense prevails.

Your age is irrelevant. In order to receive a tax-free advantage you must use your home as a principal residence for at least two out of the last five years. Capital Gain limits do apply, see the page "IRS News" and look for home exclusions.

Usually three years, however, if the IRS claims you underpaid by a large percentage, it is six years. We suggest you keep all tax records if you are an individual. Note: sometimes information used in preparing your return might be older than 3 years, example is business property, depreciated over 39 years.

It depends on how much money you received and what you received it for. If you win a prize, usually you will only have to pay income tax on the amount. If you are in a diaper study and receive over $400 you will have to pay income tax plus either self-employment taxes or use a form and declare it as tip income.

Your return is considered received by the IRS when the IRS receives the return. If you mail the return by April 15, and the IRS receives the return at a later date, it is considered for payment, interest, and penalty as being received on April 15. If you mail your payment on April 15, and the IRS does not receive your return you may be liable for interest and penalty. In simple terms, the IRS has no knowledge of your return until it is received, and it is your responsibility that the IRS receives your return.
Electronic filing is used for delivering your return to the IRS and receiving confirmation usually within 48 hours.
For amended returns, the IRS must receive your return usually within three years of its due date. Mailing an amended return 3 years after it is due on April 15 will not work. The IRS must receive your amended return by April 15.

Contacting your employer is the fastest way of obtaining a lost W-2. You may also obtain a copy from the IRS, however, it does take longer.

If you had your return prepared by Fox Tax just call and a copy will be available, otherwise, you will need to submit a request for your tax return-along with a fee-to the IRS. Visiting the IRS location under the "Locations/Rates" page is recommended.

My landload will not sign my Wisconsin Renter's certificate. Can I still file Homestead ?

If you qualify for Homestead and your landlord will not sign a renter's certificate, you must furnish proof that your paid the rent. This would be a receipt, cancelled check or money order. Attach copies to your Homestead form and a note stating that the landlord will not sign.

The IRS will generally go with what the court order has stated. To qualify for the Earned Income Tax Credit, generally the child must live with you for more than six months. To qualify for the Child Tax Credit whoever is granted the credit in the court settlement will have the right to claim the child(ren). It is in the best interest of all parties to agree on an arrangement and have the court approve it. This will eliminate misunderstandings in the future.

Generally what is owed for back taxes, child support, etc. will be deducted from your refund. If the amount owed is larger than your refund you will not receive any refund. You will receive a letter explaining the reason. It is very important that you keep a record of how much you owe in order to detect any mistake.

Information on my W-2 or 1099R or any similar type of form is incorrect. What should I do ?

You must have whoever prepared the form correct it. This usually is a duplicate form and is marked corrected. If the wrong social security number is on your W-2, the amount of social security and medicare will be credited to whoever has their social security number on the form. On 1099R call the provider if you have any questions. It is common on the 1099R to have the wrong distribution number or letter. Whatever type of form is incorrect, never take a verbal statement that the error was corrected. Always get the correction in writing.

This is basically a list of taxpayer's who owe back income taxes, child support, student loans, etc. which the government uses to determine who owes money.

If I owe the government money will I be disqualified from receiving credits, like the Earned Income Credit ?

Not yet, however, you are more than likely to receive the Earned Income Tax Credit and then have monies owed deducted from your federal or state refund.

I made an error on my return and did not discover it prior to sending in the return. I also found that I made the same error in the previous year. What should I do ?

You must do a separate amendment for each year you made the error. Do not assume that since it was not detected that you will not have to pay. You could end up having to pay interest and penalty along with the amount owed. Also, if you made an error in your current year return and filed early you may generally amend your return and pay no interest and/or penaly if your amendment was done by April 15th.

If the firm, firm's owner, or bookeeper of the firm can still be located, request a copy of your W-2 from them. If you are unable to contact anyone, supply copies of your pay stubs to verify your income and withholding. To verify you will receive credit for withholding, contact the IRS and request a copy of the W-2 your employer sent to the IRS. Furnish as much information about your employer as possible, especially the Federeal ID number.

A friend who works at the same place I do, and has the same number of children received a larger refund. What is wrong ?

Your refund is determined upon your filing conditions and parameters. If comparing returns, you will always find that one party did something different, such as number of exemptions claimed, credit for day care, pension plan allocations, etc. For peace of mind you and your friend should sit down and compare your figures. It is always possible that you might have forgot a credit which your friend used.

You may file a joint return as long as you were married during the tax year. If your wife assumed your last name she must notify the social security administration and receive a new social security card. If you fail to do this her last name on the return will not match her last name on her social security card, causing delays.

You have two options: married filing a joint return and married filing separate return. Although there is no longer a "marriage penalty" on the federal level, it is still advantageous to file "married filing joint" because Wisconisn offers a married couple credit of up to $480 for 2004. If you file "married filing separate" you are not eligable for the married couple credit in Wisconsin.

Generally if you lived more than 6 months of the year separated you may file single, or head of household if you have children living with you. More than 6 months can be as little as 6 months and 1 day. If children are involved the same test applies. If the court awards joint custody there are tiebreaker rules which apply. Children may be claimed as dependent's on one parent's return, and claimed for the earned income tax credit on the other parent's return. We recommend that you address any "gray" areas with the other parent, come to a satisfactory solution, and put it in writing. If you are taking the advise of the other parent, always get a second opinion. If the problems confronted are complicated seek legal advise. All to often parent's fail to cooperate and lose thousands of dollars to Uncle Sam. It is better to give in a little and get half than to be firm and receive nothing.

The Taxpayer is usually the man, and the Spouse is usually the women. The person who makes the most income can be listed as Taxpayer. The problem with listing the women as the Taxpayer is that practically all returns are done with the man as the Taxpayer. When you reverse the role there is always a greater risk of someone making a human error. Choose whichever way you feel comfortable with knowing the circumstances.

Does being married result in getting a smaller refund than if we file separate ?

Very seldom in Wisconsin. For the tax year 2007 Wisconsin will give a marriage credit of up to $480, and there is no longer a "marriage penalty" on the federal level.

I worked at several jobs but there was not enough withholding taken out and I owe taxes. What should I do ?

The tax tables used to determine withholding can not factor in all the variations in which people may work. As an example a person who works 5 different jobs and receives $5,000 at each job will receive a total of $25,000. When comparing the amount of Federal Tax withheld to someone with one job and an income of $25,000, the person with 5 different jobs will have less withheld.
If your situation remains the same and you expect to hold five different jobs in a year, have your exemptions changed to compensate for the variations.

A third party designee is a person who is authorized by you to discuss your tax return with the IRS. If someone prepares your return be sure they fill out the bottom section of your tax return stating their name, address, ID number, etc.

Can anyone report me to the IRS for avoiding taxes, and am I able to report someone else for the same reason ?

Yes and Yes. The IRS does not publicly encourage tax informers, and that is probably why if you want to be a snitch you can not download the form from the IRS website. Generally this is distasteful, however, there are circumstances which might justify the action. We will not give you the form or publication number or address to write. We will refer you to the local IRS office located on our "Locations/Rates" page where you will be able to obtain all necessary information. The IRS rewards vary from 15% (hard evidence) to 1%, with a maximum payment of $2 million. The IRS is never obligated to pay a reward unless you negotiate an advance contract. Main reasons for the IRS to deney a reward are that the information was of no value, already know to the IRS, or of public record. Naturally all rewards are considered taxable income.

Fox Tax ~ 566 N Main St. ~ Oshkosh, WI 54901-4925 ~ Ph: (920) 235-7077 ~ www.foxtax.com